Taxes for Watching 1 Child

[hawkfan428]

Hi! I'm going to be a new mom soon and just quit my job at a daycare center. I have 1 one who is interested in bringing her little girl to me in a few months.

Can someone tell me what I have to do tax-wise? I read that I'll need to file if I make over $400 a year, which I will. How do I do that? Do they have to fill anything out?

[TomCopeland]

Caring for one child

First, you should check with your state's child care licensing laws to see if you are required to be licensed or registered. You don't want to operate illegally.

You must report the amount you earn as income on Schedule C. You are entitled to claim many deductions in your business (even if it's only one child). You will owe income taxes on your profit (depending on your family's financial circumstances). If you make a $400 profit or more, you will owe Social Security taxes on your profit. File Form 1040SE to report your Social Security taxes.

The parent can claim the child care tax credit for having you care for their child. They should be giving you a Form W-10, to collect your identification number, but most parents don't use this form. Instead, they will probably ask you for your number. You can use your Social Security number or get an Employer Identification Number from the IRS at www.irs.gov.